The number of borrowers whose homes are worth less than their mortgage balances declined to 10.9 million at the end of March from 11.1 million at the end of December, a research firm says.

The number of homeowners underwater on their mortgages in the U.S. declined slightly during the first three months of the year.

The decline in the number of borrowers owing more on their mortgages than those properties are worth occurred despite falling home prices, which plunge borrowers underwater.

Those price declines are being offset by a pickup in foreclosure sales, which take underwater homes off the market, said Sam Khater, an economist with research firm CoreLogic of Santa Ana, which released the data Tuesday.

"We are treading water," Khater said.

The data showed that about 10.9 million homes with a mortgage, or 22.7% of such properties, were underwater at the end of the first quarter. That was a slight decline from 11.1 million, or 23.1%, in the fourth quarter.

Nevada had the most mortgaged homes underwater, 63%, followed by Arizona, 50%; Florida, 46%; Michigan, 36%; and California, 31%.

The Los Angeles metropolitan area had 365,128 underwater homes, or 23.8% of all residential properties with a mortgage. That compared with 378,230 underwater homes, or 24.6%, at the end of the fourth quarter.

Las Vegas led the nation with a 66% negative equity share, followed by Stockton, 56%; Phoenix, 55%; Modesto, 55%; and Reno, 54%. A report by the Los Angeles Times last week found that in some parts of the Las Vegas metro area more than 80% of homes were underwater, severely limiting mobility and economic opportunity in the region.

Home equity loans also are contributing to the negative-equity problem, CoreLogic said. Thirty-eight percent of borrowers with second mortgages were underwater, compared with 18% of borrowers without home equity loans.